Government reduces import duty on mobile phone components from 15% to 10%

In a recent move to boost the export sector of India, the Ministry of Finance announced on Tuesday, 30th January, 2024, a reduction in the import duty on components used for mobile phone manufacturing. The duty, which was previously set at 15%, has now been reduced to 10%. This announcement was made public in an official notification.

The revised duty covers a spectrum of components crucial for mobile assembly, including battery covers, main lenses, GSM antennas, SIM sockets, screws, back covers, and various mechanical items made of plastic and metal.

This announcement comes just before the unveiling of the Center’s Interim Budget 2024 in Parliament, scheduled for 1st February, 2024. Before the official announcements, there were several speculations and persistent appeals from several companies seeking duty cuts on more than a dozen components. Their goal is to mitigate the production costs of mobile phones in India and enhance competitiveness against counterparts in China and Vietnam.

The India Cellular and Electronics Association (ICEA), a key industry body, highlighted the existing import duties on mobile phone components in India, ranging from 2.5% to 20%. Comparatively, it pointed out that India imposes the highest tax amongst six analogous manufacturing nations, including China, Vietnam, Mexico, and Thailand. The association also emphasized that unless these duties are slashed down, the growth of mobile phone exports from India could decelerate.

Despite the prevailing challenges, India has witnessed a surge in mobile phone exports. In the fiscal year 2022–23, exports doubled to $11.1 billion compared to the fiscal year 2021–22.

A report by Reuters indicates that industry experts anticipate exports to further rise to $15 billion in the fiscal year 2023–24, with figures reaching $5.5 billion as of August 2023.

Major players in the Indian mobile phone export landscape include South Korea’s Samsung, China-based Xiaomi, and tech giant Apple, whose iPhones are currently assembled in India. There are indications that Apple might extend its manufacturing operations to include iPads and Air Pods, gradually diversifying production away from China.

This move by the Ministry of Finance to reduce import duties on mobile phone components is anticipated to fuel the growth of India’s mobile manufacturing sector, providing a potential boost to the country’s exports in the fiscal year 2024–25.